JPMorgan Chase third-quarter net interest income beats estimates

Investing.com -- JPMorgan Chase (NYSE:JPM ) has reported higher-than-expected net interest income in the third quarter, sending shares in the Wall Street banking giant up in premarket US trading on Friday.

The largest US lender by assets posted managed net interest income (NII), or the difference between what it pays for deposits and earns from loans, of $23.53 billion during the period, compared with Bloomberg consensus estimates of $22.8 billion.

Net income, meanwhile, grew to $12.9 billion, topping expectations thanks to higher revenues and improved cost discipline. But the number dropped by 2% from a year ago.

In the current quarter, JPMorgan said it expects NII to decline slightly to $22.9 billion, bringing its annual total to about $92.5 billion. NII came in at $89.7 billion in its 2023 fiscal year.

The outlook comes as the Federal Reserve is set to embark on a potential cycle of policy easing, possibly ending a time of elevated interest rates that have fueled returns at big banks in recent years.

In September, JPMorgan President Daniel Pinto told an industry conference that the analysts' consensus projections for a drop in NII of $1.5 billion to $90 billion in 2025 was "not very reasonable," citing expectations that the Fed may slash borrowing costs "by 250 basis points." Pinto added that he thought the number would be "lower," although he did provide a specific figure.

JPMorgan has also previously cautioned investors in the past that it may have been "overearning" on its lending profits.

The bank set aside $3.1 billion in provisions for possible loan losses, more than doubling the provisions it had reserved in the same quarter last year.

Chief Executive Jamie Dimon said in a statement that while inflation is "slowing" and the US economy remains "resilient," the bank is wary of a host of issues, including "large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world."

"While we hope for the best, these events and the prevailing uncertainty demonstrate why we must be prepared for any environment," Dimon said.

Source: Investing.com